Exclusionary Vertical Contracts and Product Market Competition

Jongsay Yong

The Journal of Business, 1999, vol. 72, issue 3, 385-406

Abstract: This article considers whether a monopolist is able to deter more efficient entrants through contracting with buyers. In the antitrust literature, the Chicago School's stand is that such contracts cannot be anticompetitive; hence vertical contracts should be accorded per se legal status. In a four-stage game with the following features: (1) the incumbent enjoys a first-mover advantage, (2) the entrant must incur some sunk cost to enter the market, and (3) entry is uncertain, the author shows that vertical contracts can be anticompetitive if there exists product-market competition. Thus, the author advocates caution in treating all contracts as per se legal. A three-factor, repeated-measures experiment tested the effect of leadership style (charismatic, structuring, and considerate) on performance improvement on a manufacturing task over four trials. Findings from a repeated-measures multivariate analysis of variance indicated that individual exposed to considerate leadership had superior initial performance but that this difference faded over time. Further analysis indicated that self-efficacy fully mediated the relationship between leadership style and performance. Copyright 1999 by University of Chicago Press.

Date: 1999
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